Get ready...

[A Black Falcon]

You could argue it means that making a law that says that the Ten Commandments or a similar religious icon cannot be shown in a public place is PROHIBITING the free excercise of religion.

No, not unless you give equal time to all religions -- that's the point of that clause, really. Giving equal time to all. Of course, in 1789 it was mostly referring to the various Protestant factions, but times change and now it refers to all religions... so even if you manage to read the constitution to mean that, making a law like that would require you to also allow just about any legal religion to put displays in similar places in public buildings. :) "Ten Commandments Only" would never past legal muster.

In modern times we recognize that promoting one religion above others isn't right (or at least we do most of the time). That's why they said what they did in Kentucky. Texas? I really don't know... bad decision, I'd say. But that did have a bit more going for it -- it was at the statehouse, not a courtroom; it'd been there for 40 years; and was one of 20-something displays. But yes, the courts will have to work through this to figure out which displays are legal and which aren't... because this is clearly something where we cannot simply transmute what the Founders meant into current policy. The times have just changed too much. We need to build on their work and interpret it for modern times... we do that already of course, but it's an important part of legislating.

What exactly does prohibition of free exercise MEAN?

It means anything that promotes one religion over the others... such as, oh, displaying a religious symbol of one religion over the others? However, in practice as we see here the issue is very muddy -- historical use/display has been allowed, mostly -- witness the Pledge of Allegiance (though I think that should definitely be changed), 'In God We Trust' on our money, swearing in witnesses in court (or the president) on a Bible, etc. Because of how important religion is to so many people the issue never ends up as clearcut as it sounds like it could be going by the Constitution... so I wasn't really surprised to see one of those displays held up in court. I don't think it's in keeping with how we interpret that clause of the constitution now, but with how important the religious right is to the Republican party...